ETF investors looking for a sector beyond technology that’s full of innovative companies might want to consider healthcare. In fact, healthcare is one of the most innovative sectors on the market today, and its innovative trajectory is increasingly attractive.
However, the conversation doesn’t end there. Investors looking to tap into the healthcare innovation story while eschewing stock picking are apt to turn to exchange traded funds or mutual funds. That’s a good move, but it also requires some due diligence because not all healthcare ETFs are adequately levered to the sector’s innovative properties.
One that checks that box is the Goldman Sachs Future Health Care Equity ETF (GDOC). GDOC, which turns a year old next month, is actively managed — a pertinent trait because healthcare innovations often occur at rapid paces.
GDOC’s status as an active ETF is relevant for other reasons, including the point that healthcare innovation is being driven by multiple factors, including technological advancements and government spending, among others.
“Cheaper processing power, cloud computing and the growing sophistication of artificial intelligence (AI) are all helping accelerate innovation,” noted JPMorgan Wealth Management. “Healthcare also benefits from significant government research efforts, which often generate entirely new lines of medical advancement.”
As has been cited for years, changing global demographics in the form of rapidly aging populations in the developed world and China, among other regions, are among the reasons the investment community is fond of healthcare’s long-term thesis. However, that thesis is more complex than simply knowing that as people age, many require more prescription pharmaceuticals.
Investors looking to capitalize on demographic shifts via a healthcare ETF may find GDOC compelling because older patients can benefit from evolving medical devices and improved telemedicine that doesn’t require them to make frequent visits to doctors’ offices. Some GDOC components are driving these advancements.
“Health monitoring is being reshaped. Fitness trackers have already brought low-cost general health recording to the masses,” added JPMorgan. “Now, devices focused on specific health concerns (such as glucose monitoring) are becoming more available. We expect to see the trend of wearable medical devices to increase and help build the global health data sphere available to researchers, further accelerating innovation and discovery of new treatments.”
Bottom line: Healthcare’s future is now, and GDOC makes it easier for long-term investors to capitalize on the sectors often overlooked, but promising innovative characteristics.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.